A campaign for some form of rent control in Seattle is being propelled by many reasons, from concern about affordable housing to angst over a fast-changing city. The one rationale that is difficult to find: economics.
Almost all economists agree that rent control is a bad idea. Yet it seems inevitable that Seattle is going to have a “conversation” about the policy, and it likely won’t be Seattle nice.
To be sure, economics doesn’t answer every moral or civic question facing a nation or a city. But it is worth pausing to see why a profession distinguished by its quarrels is so nearly united against rent control, rent stabilization, rent regulation, whatever you wish to call it.
Rent control inevitably limits supply. Developers have less incentive to build new housing if they can’t profit from it at market rates. Existing landlords gain enormous power over the price-controlled units and have fewer inducements to maintain them. Prospective renters face severe vetting by landlords and long waits for apartments.
The practice is fading in the United States but remains widespread in parts of Europe. The Smart Growth Seattle blog featured a “Letter from Stockholm on Rent Control” to Seattle filled with horror stories.
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It reads in part, “Stockholm City Council now has an official housing queue, where 1 day waiting = 1 point. To get an apartment you need both money for the rent and enough points to be the first in line. Recently an apartment in inner Stockholm became available. In just 5 days, 2,000 people had applied for the apartment. The person who got the apartment had been waiting in the official housing queue since 1989!”
If you want to see a city with plenty of affordable housing, look east to Phoenix. Yet the city is nearly 518 square miles and deeply segregated by income and ethnic group. The historic districts north of downtown contain streets of lovely bungalows and period revival houses a century old or more. But they are among the most expensive and coveted in the metropolitan area.
Any effort to integrate Phoenix neighborhoods by class would cause more Anglo flight to the suburbs, if not provoke a revolution against the city council. Also, the economy is limited and low-wage.
Seattle consists of about 84 square miles of land, 54 percent zoned for single-family houses. If the recent uproar over upzoning proposals by the mayor’s Housing Affordability and Livability Agenda committee is any indication, that won’t change. Especially in higher-class neighborhoods. Seattle also enjoys one of the most vibrant economies in America. It is in demand, and that raises prices.
Advocacy for rent control here is growing out of a larger set of trends, both nationally and locally.
Inequality is at levels not seen since the eve of the Great Depression, if not the Gilded Age of the late 19th century. Most jobs lost in the Great Recession have been replaced by positions that pay less. The wages of average Americans have been stagnant or declining for decades. And millions of jobs, especially for the blue-collar middle class, have moved offshore.
Seattle’s booming technopolis is leaving many behind. House prices and rents are very high. Old Timers and even more recent transplants see the authentic city of their memories fading away.
In addition, almost all the new construction is of a soul-killing sameness — glass sheets, superblocks, bunker-style houses replacing older teardowns. The loss of the classic three-story brick, affordable Seattle apartment house is especially lamentable.
Some important issues are mostly missing from the debate. Among them, a regional approach to fast-track transit and passenger rail to link more affordable regions with employment centers.
This technopolis needs to create what urban scholar Richard Florida calls “port of entry” jobs so lower-skilled people can move into the technology economy. Seattle could become a national pioneer in this much-needed area. Also, policies should retain and expand sectors that provide upward mobility, such as maritime and logistics, rather than aim to merely maintain people in a more secure poverty.
And, to state the obvious, Seattle needs to build more housing.
A City Council member recently asked me to keep an open mind about rent control. So, despite the abundant economic evidence to the contrary, I’ll try.
But a case must be made, and it shouldn’t be conflated with the $15 minimum-wage battle. The minimum wage has been lagging for years, and most economists support raising it to some degree.
Rent control undoubtedly does create winners. In addition to the landlords and tenants happily seated when the music stops, there are also various “advocacy groups” and politicians.
Does the wider population, including those needing affordable housing, benefit? The economic evidence says no.